Today’s release of U.S. International Trade Data shows Canada and Mexico surpassed China but the biggest beneficiary is Vietnam.
The Wall Street Journal reports Tariff Fight Costs China Spot as Top U.S. Trading Partner.
U.S. imports from China fell 12% in the first six months of 2019 from a year earlier, while exports fell 19%, the Commerce Department said Friday in a monthly trade report. The total value of bilateral goods trade with China, $271.04 billion in the first half of the year, fell short of that with both Canada and Mexico for the first time since 2005. Mexico is now the U.S.’s top trading partner.
The decline in trade flows has hit U.S. farmers’ and multinationals’ earnings and sent importers scrambling to rearrange complex, global supply chains for electronics, machinery and commodities. It also highlights the widening impact of President Trump’s effort to negotiate better terms for U.S. companies in China and reduce America’s trade deficit.
Import Shuffle
Vietnam is the biggest beneficiary of in percentage terms, followed by the Netherlands, Belgium and Taiwan.
Winning Not
Despite the decrease in trade with China, Trump has not put a dent in the trade deficit.
Recession May “Help”
In a perverse way, Trump may manage to reduce the trade imbalance. His tariffs are certainly recessionary and note what happens to trade in recession in the above chart.
A Global Manufacturing Recession Started and Trump’s China Tariffs Made Matters Worse.
And please note the average lead time between manufacturing recessions is less than a full quarter.
For discussion, please see Manufacturing Recessions vs Real Recessions: How Much Lead Time Do You Expect?
Mike “Mish” Shedlock
Follow the money from the United States huge trade deficit with Mexico becomes more disturbing as you begin to understand where the money eventually ends up. When you start thinking about all the money and jobs we shift into Mexico each year you would think by now Mexico would be rolling in cash.
A bit of research quickly confirms that the money Mexico receives by way of trading with America quickly passes through its lands and flows to Asia. It could be argued that when all is said and done we are still transferring our wealth to the far east only by the scenic route. More on the problem with this in the article below.
Sure, tariffs are throwing some sand in the gears.
But you are ignoring King Dollar. $US has been strengthening the past couple of years. Hurting US exports. Strengthening in large measure by Federal Reserve raising rates and shrinking balance sheet while other central banks continued to ease. China’s loose peg to $US is hurting them as much as any tariff. Mercantile economies manipulating their currency (lower) is a back door tariff (for their trading partner).
I suspect Mish is out of range and I’ve learned not to debate with anyone about Hitler and his nazis.
Trump is anti-American in spirit. His heart is.over in Asia and has been since the mid-90s
I wonder what % of Vietnamese exports are from Chinese-owned companies? Is it possible that some goods from the Netherlands are Chinese goods that have been diverted?
Can this be more a move to reduce China as a threat and as a world power, trade consequences be damned?
No. That would mean that trade has strategic value and Mish has told us all that trade has no strategic value and therefore cannot be used a an instrument of national policy. SARC
Yes.
How is it that the Chinese Communist Party isn’t considered the moral equivalent of the Nazi regime? They torture people and kill people to harvest their organs. Why isn’t everyone demanding a minimum of 50% tariffs on Chinese goods? Look, people used to give me a hard time for praising Hitler and the Nazis. Now I don’t need to praise them anymore because it’s obvious they were not that bad after all.
I posted awhile back that Trump has luck in 2 negatives multiplying to be a positive or net nothing. The post by Mish describes exactly what I meant.
The odds the Hong Kong Umbrella (for tear gas defense, etc) Protestors have shifted to “Made in America” umbrellas??
I wonder if any company in the US makes umbrellas?!
IMHO I would be cautious with the HK situation becoming a “Black Swan” event with China. Neither side is backing down.
It depends on if anyone cares about Hong Kong. It would take about 2 days for there to be martial law in Hong Kong and people would die for sure but according to Trump they were rioters anyway and China is free to deal with them as they please.
We shall see. “Hong Kong Paralyzed by Strike
Hong Kong’s leader Carrie Lam said the city was becoming dangerous and unstable, condemning violent protests in her first public comments in two weeks on the political turmoil engulfing the city, as the financial center was thrown into further chaos by a strike.”
Sure, “normally” China could keep this under control. By definition, in a “black swan” they can NOT. (At least not easily.)
Yes it will depend on what China decides to do.
Where was I? “Violent Chaos Breaks Out In Hong Kong: Police Stations Set On Fire, Triads Beat Protesters, City Paralyzed.”
I wonder if Canada and Mexico are selling us reboxed Chinese goods?
Obviously, yes, some. That always happens. Vietnam probably is, too.